The Exchanges

Q 20 14. Okay. And for folks not familiar with the product, maybe tell an example, give an example of a customer and what they pay you for, what do they get?

A Okay, so our average customer is a mid-market company, uh, that is very concerned about security, uh, cybersecurity, I should say, um, and can't afford or deal with all the, uh, Uh, products that are out there to create a, uh, cybersecurity environment for themselves. They would need to buy anywhere between six to 15 different products, uh, spend between 40 to a 115 dollars per user per month. And, um, and then deal with all managing and integrating and, Uh, dealing with all of these platforms, and what we've done was we created a, uh, single platform that takes care of all the security needs of a mid-market or a small business, uh, company, uh, for seven dollars a month, um, and, uh, just covering everything from their users, to the devices they use, to the networks that they connect through, to the cloud services, to their email, everything through one platform, which is extremely simple to use.

AI assessment note: “our average customer is a mid-market company... for seven dollars a month”

Q Okay, cool. And then how is that different from the VAR agreements? Or the channel, the channel team agreements. When you sign up a new channel partner, what is that relationship like?

A So very similar. We sell to our partners for a, uh, discount of the MSRP, and they mark it up, and they add on top of it also their services. So for example, an MSP doesn't just sell product. They sell a service. They help manage the platform on behalf, on behalf of their customers. So from their perspective, their offering now is a lot more complete, and what we can give the MSP beyond that margin or that, uh, You know, that, uh, discount that they can, the haircut that they can get from it. They're actually getting a lot more from it because they are getting a new market open to them because now they can offer cybersecurity at a very reasonable cost to a customer, uh, to whom they could have probably offered only antivirus in the past. Um, because the price points are just so difficult and beyond the price point, maintaining a security stack. It's a very expensive thing from an HR perspective, and what we offer that customer, that MSP, that partner, is the ability to offer a stack that manages pretty much itself because of the engines that we have, so there's a lot less work that a human needs to be doing, so we've removed more than 95% of the human element through AI, through automation, through, um, so The same team can now support a whole lot more customers from an MSP's perspective, so that I can go out and sell it at a very reasonable price.

AI assessment note: “So very similar. We sell to our partners for a, uh, discount of the MSRP”

Q Do you worry? I know, I agree. And that multiple is way higher than others at your stage that I'm seeing. I mean, do you, but I don't know that we should, I mean, you could brag about it, but I don't know if that's a good thing to brag about. I mean, do you worry about growing into that valuation?

A We don't think of it that way at all. We think that evaluation was very fair because evaluation represents, uh, the potential moving forward. And, uh, as we've shown that we've grown in the year that has passed since the previous, uh, the previous, uh, fundraise, we've shown that we've again tripled our growth. Um, and this year we're expecting to do the same. I think that, uh, from an investor perspective, when you look at those kinds of KPIs, You're looking at the potential, the growth moving forward, and being that we were able to hit our quarterly, um, commitments for 48, um, uh, 48 months. For 12, I'm sorry, for 12 quarters, 48 months I meant, uh, for, uh, 12 quarters, uh, straight, um, it, it gives a lot of confidence to an investor, uh, to come in and say, you know what, these guys know what they're doing.

AI assessment note: “We don't think of it that way at all. We think that evaluation was very fair”

Q How did you, how'd you find them then? Tell us the story.

A So the story is that we very much like every other cybersecurity company in the world started off as an enterprise plate. Uh, we looked, uh, to sell into the enterprise market. And, uh, in that market, there are 2700 vendors. So, uh, fierce competition. And we noticed that while we were Targeting these large players, the people that were actually interested in buying were mid-market and smaller players, and then we did a complete redirect. Uh, we looked at that market and we said, why have they not bought so far cybersecurity? And, uh, understood what were the issues. The issues were complexity and price and dealing with multiple platforms. And then we Decided to take a, take a break, redesign the product to fit that market, which is exactly what we did. We launched with secure cloud in, uh, And then, uh, rebranded and launched a new, uh, version of the platform just this year, uh, re-made it Coro and, uh, even made it simpler to use, um, more integrated, uh, with, uh, what our customers were interested in, which was mostly email and storage and endpoint devices and, uh, gave them something that was extremely easy for them to, uh, absorb, manage,

AI assessment note: “we noticed that while we were Targeting these large players, the people that were actually interested”

Q Five and a half. And would there, I mean, it sounds like you followed a pretty standard fundraising path. Is there anything looking back you would have changed or done differently?

A Not really. I think that, uh, Look, the key thing that we've done right was we've selected, uh, to partner with investors that really believed in our vision. Uh, so, um, JDP, who has been with us literally from the seed days until today, they've invested in every single round and led every single round until the last one, until the, uh, CEC. Um, you know, it's very important who you partner with. And we took that decision being that, um, uh, all of my partners and I have been around the block several times. We realized how important it is who you partner with. Uh, and, uh, we've made a very conscious decision to go with JVP and they've been a phenomenal partner all through Uh, these, these, uh, seven years.

AI assessment note: “Not really. I think that, uh, Look, the key thing that we've done right”

Q to be clear, he has not confirmed this. I am guessing his on paper net worth, based off the percents on the top I put on the bottom, but I'm guessing on paper net worth for Quora is around 50, sixty million bucks. The question is for you personally, like, How do you turn this into actual cold, hard cash? Is IPO your only option? Have you done any secondaries?

A Yeah, so from my perspective, and I can speak for my other co-founders as well, because we're all on the same page with that, we're not all that interested in, uh, shooting for an exit. We're interested in shooting for a ten billion dollar revenue ARR company, because the market is massive. So we're looking at a market that we Uh, the TAM, uh, is about a hundred and ten billion dollars in our market, and we want to be the dominant player in that market, so we're much more interested in building the largest, the most, uh, successful company in mid-market small business cybersecurity rather than thinking about an IPO or, or an exit, and I think that our, uh, funders Uh, also view it that way, because that exit will come if we build that massive organization.

AI assessment note: “we're not all that interested in, uh, shooting for an exit.”

Q founders at your same stage that I talked to that say, man, I wish I didn't raise it such a high valuation last year because now auction grants are underwater. With twelve million in ARR when you did your series, see the first eighty million out of 500 post, that was a 41 X multiple. Do you regret raising at such an aggressive, many people are calling aggressive multiple today?

A No, because we were able to raise again at a very aggressive multiple, uh, this year. Um, and as long, look, the, uh, we are showing phenomenal growth, both ARR, customer base, uh, in every aspect of, uh, um, every KPI that we're measuring, we're showing, uh, phenomenal results. So from an investor perspective, you know, When you look at a company and you analyze a company and having been an investor, having been on the, you know, the dark side of the VC world, I can tell you, you look at, you look at, uh, KPIs and, and that's how you make a decision. So when a company, despite the economic downturn that we're experiencing out there, despite everything that is going on, uh, in the market, uh, is able to show that kind of aggressive growth. You understand that there is something unique about Coral, and, uh, and that's really what's happening.

AI assessment note: “No, because we were able to raise again at a very aggressive multiple”

Q Very cool. What else? What else do you wish people like me asked you about, but you never get a chance to talk about?

A No, you always ask all the right questions, Nathan. It's been, it's been an incredible year for us. Uh, and I'm extremely proud of the team. Uh, we've, uh, we've grown the team, uh, tremendously. Um, and both, uh, we've, we have a massive office in Chicago right now. This is where our sales center is. So we have, uh, well over 200 people just there. Um, and, uh, it's an amazing team. I mean, we just moved to a new office, uh, We took over an entire floor in a building. It's, it's really great as a founder to see that kind of, uh, development. Um, and when they show up, you know, sometimes it's kind of weird because as, uh, as a founder, you show up and there's a whole bunch of new faces. Um, and, uh, it's heartwarming, but also very strange, not, not to know everybody.

AI assessment note: “No, you always ask all the right questions, Nathan. It's been an incredible year”